Valuation Flashcards
1
Q
Tell me what the 5 methods of valuation are.
A
- Comparable
- Investment
- Residual
- Contractors
- Profits
2
Q
Tell me about how you would value a building using the profits/contractors/investment/comparable/residual method of valuation.
A
3
Q
How do you decide which valuation method to apply?
A
4
Q
When and why would you use one of these methods?
A
5
Q
What is a years purchase multiplier?
A
6
Q
Give me an example of a good covenant and how this might impact a valuation.
A
7
Q
How would you distinguish limitations on liability in your valuations?
A
8
Q
Where in your valuation report do you state any limitations on liability?
A
9
Q
What relevance does Hart v Large have on your valuation practice?
A
10
Q
is a valuer’s liability usually limited to the overvaluation on the valuation date?
A
11
Q
What would you do if you received a notice of a PII claim from a client or their solicitor?
A
12
Q
Is there a difference between being negligent when undertaking a survey/valuation and providing negligent advice?
A
13
Q
What is run off cover?
A
14
Q
What is the Red Book?
A
15
Q
Why does the Red Book exist?
A
16
Q
Tell me about a factor which may impact value.
A
17
Q
What is your duty of care as a surveyor when undertaking a valuation?
A
18
Q
To whom do you owe this duty of care?
A
19
Q
Why is independence and objectivity important when valuing?
A
20
Q
Is there a separate UK National Supplement?
A
21
Q
What is the UK valuation guidance called?
A
22
Q
Why does the UK guidance exist?
A
23
Q
How should this be applied in relation to the Global Red Book?
A
24
Q
What was changed in the last update to the UK National Supplement?
A
25
Explain one UK VPS or UK VPGA that relates to your work as a valuer.
26
When was the Red Book last updated?
27
Does this differ from when IVS were last updated?
28
What changes were made?
29
Which do you follow - the latest IVS or the Red Book Global?
30
Which sections of the Red Book are mandatory and which are advisory?
31
What does PS1-2/VPS1-5/VPGAs relate to?
32
What type of advice does the Red Book cover?
33
If you provide preliminary advice / draft valuation report what should you state in writing to your client?
34
What type of valuations might be relied upon by a third party?
35
Tell me what the definition of MR/MV/investment value/fair value?
36
What is the difference between an assumption and a special assumption?
37
What sources of information would you consider when preparing a valuation report?
38
If you have previously valued an asset do you need to make any additional disclosures and what might they be?
39
If your firm is too small to have a rotation policy or valuation panel what else can you do to ensure objectivity?
40
When might a conflict of interest exist in relation to a valuation instruction?
41
What must be included in your terms of engagement / valuation report?
42
Where is this covered in the Red Book?
43
What is a restricted valuation service and can you provide one?
44
How do you deal with limitations on inspection or analysis?
45
Can you revalue a property without inspecting?
46
What RICS guidance relates to the use of comparable evidence?
47
What is an internal valuer?
48
Can an external valuer provide an internal purposes valuation?
49
What happens if market conditions change between the valuation date and report date?
50
Is special value from a special purchaser reflected in MV?
51
Where does the definition of fair value come from?
52
Does this differ from MV?
53
When is fair value used?
54
What are the 3 approaches under VPS5?
55
What is the Valuer Registration Scheme?
56
Are there any instances where certain sections of the Red Book may not apply?
57
What are these and which sections don’t apply?
58
What is the basis of value under UK GAAP FRS 102?
59
When would you use EUV?
60
What is the definition of EUV?
61
What additional criteria apply to secured lending valuations?
62
What information should you specifically request for a secured lending valuation?
63
What is a regulated purpose valuation?
64
What additional disclosures must be made for a regulated purpose valuation?
65
What is the basis of value for a statutory valuation?
66
What might a statutory valuation relate to?
67
What is the definition of the statutory basis of valuation?
68
Is this the same for all statutory valuations?
69
What is a yield?
70
What is a Net Initial Yield?
71
What is a reversionary yield?
72
What is an equated yield?
73
What is an equivalent yield?
74
How would a yield reported from auction differ from a Net Initial Yield?
75
What purchaser’s costs do you deduct from a valuation?
76
When do you deduct purchaser’s costs from a valuation?
77
How would you value a property in uncertain market conditions - does the Red Book give any guidance?
78
How could you value a long leasehold interest?
79
How does a term and reversion differ to a DCF?
80
What is the difference between a growth explicit and a growth implicit yield?
81
Give examples of each of these types of yield.
82
How would you value an under/over rented investment property?
83
When would you use a dual rate investment calculation?
84
Where can you find yield evidence from?
85
What is the hierarchy of evidence?
86
What would you do if comparable evidence was limited?
87
What is NPV?
88
What is IRR?
89
What is a term and reversion?
90
What is a hardcore and topslice?
91
What is a Discounted Cash Flow (DCF)?
92
What is a short-cut DCF?
93
When would you use a DCF?
94
What are the advantages of a DCF?
95
What are the disadvantages of a DCF?
96
What is a YP/PV/YP in perpetuity?
97
What is marriage value?
98
When would you include an element of hope value in a valuation?
99
Can you include hope value in a secured lending / mortgage valuation?
100
How would you value a ransom strip?
101
How does market value differ to investment value/fair value?
102
What is a dual capitalisation rate and when would you use one?
103
Is the profits/DRC method used for specialised or specialist property?
104
What type of properties would you use the profits method for?
105
What type of properties would you use the DRC method for?
106
When would you use the profits method?
107
What is intangible goodwill?
108
What is turnover / gross profit / net profit?
109
What are the steps to providing a profits valuation?
110
What is Fair Maintainable Turnover?
111
What is a Reasonably Efficient Operator?
112
Does the assessment of the REO include personal goodwill and trading potential?
113
What is personal goodwill?
114
What is trading potential?
115
How do you calculate the tenant’s proportion of rent in a profits valuation?
116
What is EBITDA?
117
What is Fair Maintainable Operating Profit?
118
How do you calculate the divisible balance?
119
What accounts information would you want to review for a profits valuation?
120
Do RICS provide any guidance on RLVs or valuing development property?
121
What is an RLV?
122
What is a development appraisal?
123
How do they differ?
124
How else can you value development land?
125
What is the basic process of undertaking a RLV?
126
What does a development appraisal show?
127
What are the key things you need to consider when appraising / inspecting a development site?
128
What else should you consider?
129
Tell me about your due diligence when undertaking a RLV.
130
What sources of information do you use when undertaking a RLV?
131
How can you assess development potential?
132
What is GDV/NDV?
133
How do you calculate GDV?
134
What do development costs include?
135
When do you apply VAT when assessing development costs?
136
Where can you source build costs from?
137
What are typical finance costs?
138
What would you apply finance costs to and on what basis?
139
What is an S curve?
140
What factors influence the decision to use an S curve when applying finance costs?
141
Is there a quick rule of thumb which can be used when applying finance costs?
142
What do holding costs typically include?
143
How do you typically calculate developer’s profit?
144
What are some typical inputs (and %/£) in a RLV?
145
What other criteria might be assessed in terms of performance measurement for a RLV?
146
What are the advantages/disadvantages of a RLV?
147
What is included in the development programme?
148
What is CIL?
149
What is S106?
150
What are the differences between CIL and S106?
151
What is CIL charged on?
152
What is a Monte Carlo simulation?
153
What is a sensitivity analysis?
154
How do you carry out a sensitivity analysis?
155
What variables might you change and why?
156
What factors affect sensitivity of a development appraisal?
157
Tell me about your understanding of incorporating affordable housing into development appraisals.
158
Tell me about software you have used to provide a RLV.
159
What RICS guidance relates to the valuation of development property?
160
Give me a limitation of this software.
161
What is viability?
162
When would a cost approach be used?
163
What type of buildings would a cost approach be used for?
164
What is the supposition that a DRC is based upon?
165
What are the 3 components of the cost approach?
166
How do you assess the value of the land?
167
How do you assess Gross Replacement Cost?
168
What costs would you consider within GRC?
169
What would you do if the building could be replaced with a modern equivalent?
170
How would you deal with depreciation/obsolescence?
171
What types of obsolescence are there?
172
What are the three ways to deal with depreciation?
173
Is the cost approach a market valuation?
174
What liabilities may be created through valuation?
175
What is a liability cap and when would one be used?
176
Explain why the RICS are carrying out an Independent Valuation Review.
177
Who is leading this?
178
Explain what you understand by the term
margin of error.
179
How can a NIY of zero be achieved?
180
In a scenario where rents are static and the capital value increases would you expect yields to increase or decrease?
181
What does heterogenous mean in terms of comparable evidence?
182
What does the term 'tone of value' mean to you?
183
What are current mortgage rates (on a BTL mortgage)?
184
How have they changed over the past few years?
185
What are current LTV ratios?
186
How could you value an HMO using the investment method?
187
What were you specifically looking for in relation to the HMO use?
188
How can you establish if a property is an HMO?
189
What are the minimum rooms sizes for an HMO?
190
What is statutory overcrowding?
191
What legislation relates to this?
192
Tell me about any other legislative requirements relating to HMOs you are aware of.
193
What planning use do HMOs fall into.
194
Is there generally a premium attributable to HMO use over and above value as a single family house?
195
Why did you use an investment method of valuation?
196
What is an Article 4 direction?
197
How might gross and net yields differ for HMOs?
198
What RICS guidance are you aware of relating to HMO valuation?
199
Was there any UK-specific guidance you also complied with?
200
What category of buy-to-let valuation does a HMO fall within?
201
What are some of the broader issues facing the HMO sector?
202
Tell me about the regulation of the HMO sector.
203
How can rental incentives impact on HMO valuation?
204
What are guaranteed rents / cash backs in lieu of rental income and how can these impact upon value?
205
How can Market Rent impact upon the underwriting of a loan?
206
How have you commended upon any limitations to accuracy of your HMO valuations?
207
How can maintenance costs impact upon valuation and what does the Red Book say about these for HMOs?
208
When is it reasonable to adopt the income approach when valuing HMOs under the Red Book?
209
What additional considerations do you need to make for category 3 scenarios?
210
What is a lifetime mortgage/home reversion/sale and rent back/home purchase plan?
211
What are the Red Book requirements in relation to these?
212
What is shared ownership/shared equity scheme?
213
How would you value a shared ownership / shared equity scheme property?
214
What is a trustee mortgage valuation?
215
What legislation relates to this?
216
What is affordable/market rent?
217
What is your role in relation to advising a lender client?
218
What liability do you have to the borrower when advising a lender client?
219
Does this vary depending on whether the valuation is disclosed by the mortgagee?
220
Tell me about the requirements in relation to your terms of engagement / inspection.
221
What is the basis of value?
222
What factors may have a material impact on value?
223
What assumptions / special assumptions have you made in relation to this?
224
What is reinstatement cost and when would you be asked to provide it?
225
How would you calculate it?
226
How would you deal with suspected hidden defects?
227
How would you treat incentives?
228
Tell me about the application of the RICS Residential Mortgage Specification in relation to a specific purpose
e.g.
229
Where would you find the RICS Residential Mortgage Specification?
230
What are the 3 categories of BTL investments?
231
Have you valued a historic building?
232
What RICS guidance were you aware of?
233
Can you tell me a key principle of this guidance?
234
How do you reflect the historic nature of a building in your valuation advice?
235
What type of RICS surveys include a valuation?
236
What level of valuation advice does a Level 2 Home Survey include?
237
What guidance does the RICS provide in relation to this?
238
What is the basis of valuation in this type of report?
239
What assumptions are made in this type of report?
240
What else do you need to include in relation to your valuation?
241
Tell me about the RICS guidance relating to the valuation of individual new-build homes.
242
What is the new build premium?
243
How would a valuation of new build home differ to a second hand home?
244
Tell me about how you have applied this guidance to a new build valuation.
245
What is a key principle of this document?
246
Tell me about your use and understanding of AVMs.
247
Does the RICS provide any guidance on this?
248
What is an AVM?
249
What is an advantage and a disadvantage of using an AVM?
250
Give me an example of an AVM you have used.
251
Have you valued a residential property purpose built for renting?
252
What RICS guidance are you aware of in relation to this?
253
What are the key principles?
254
What are the three key pieces of legislation which have impacted the UK residential market (and purpose built valuation)?
255
What valuation considerations would you take into account when valuing a purpose built for renting property?
256
What is the difference between a gross and net yield in this respect?
257
What factors influence yields?
258
What residential operating expenses would you need to take into account?
259
What is Net Operating Income?
260
How would you calculate it?
261
Have you valued a BTL / HMO property?
262
What RICS guidance are you aware of in relation to this?
263
When was it last updated and what changes were made?
264
What are the key principles?
265
How might the release of a large number of new build properties impact the local market?
266
Can ‘hope value’ be considered in valuations falling under UK Appendix 10?
267
If Market Value is assessed prior to or during construction should the valuation reflect the evidence and market at the date of valuation or an assumed completion date?
268
Is there a set discount for a new build premium?
269
What do RICS say about sales incentives?
270
Should you reflect sales incentives in your valuation?
271
Where would you find details of incentives?
272
When and why would you review a UK Finance Disclosure of Incentives Form?
273
What are some of the ways that a home can be offered at a reduced price?
274
What is a new build warranty?
275
How long would a typical warranty last for?
276
If a property was built in the last 10 years and does not have a professional certificate or guarantee/warranty would this affect value?
277
What are the two special assumptions relating to Projected Market Value (PMV) and when would you adopt PMV?
278
What are some of the types of home finance product?
279
Who further regulates valuations for home finance products?
280
What are the key differences between a lifetime mortgage and a conventional mortgage?
281
Would the amount of mortgage debt to be redeemed at the end of a lifetime mortgage term be less or more than that of a conventional mortgage?
282
What is home reversion?
283
What is sale and rent back?
284
What is a home purchase plan?
285
What are the bases of value for a registered social landlord’s housing stock for secured lending purposes?
286
What is a statutory valuation?
287
Who is responsible for Council Tax valuations?
288
What Council Tax bands exist in England?
289
What is the basis of value for Council Tax valuations?
290
What assumptions are made in a Council Tax valuation?
291
What is the Right to Buy?
292
What legislation relates to Right to Buy?
293
When might a lender instruct a drive-by valuation?
294
What is the impact of the Rentcharges Act 1977?
295
Within what general distance of a dwelling might Japanese Knotweed have a material impact on value?
296
What is leasehold enfranchisement?
297
How does it differ for flats and houses?
298
What is the basis of valuation?
299
What is the basic procedure of leasehold enfranchisement?
300
Who can serve a valid notice to enfranchise/extend on the freeholder?
301
How could a mortgagee seeking remedy from a defaulting borrower serve a valid notice?
302
How would you value a long leasehold property with a rising ground rent which increases significantly in a fairly short period?
303
Do RICS publish any guidance on leasehold reform?
304
What right did the Leasehold Reform Act 1967 introduce?
305
What is the definition of a house under the Leasehold Reform Act 1967?
306
What are the qualification criteria to acquire the freehold of a house?
307
How long is a ‘long tenancy’?
308
Which section are the bases of valuation set out in?
309
What does the Section 9 (1) basis of valuation comprise?
310
What does the Section 9 (1A) basis of valuation comprise?
311
What does the Section 9 (1C) basis of valuation comprise?
312
Which is the most favourable basis of valuation?
313
How is a claim to acquire a freehold started?
314
What is the main impact of the tenant’s notice?
315
How long does a landlord (reversioner) have to respond to the tenant’s notice?
316
If a landlord intends to reoccupy or redevelop what Sections can they rely on?
317
If the parties cannot agree on a price where is the matter referred to?
318
What is marriage value?
319
What is hope value?
320
How is marriage value calculated?
321
What is the deferment rate?
322
What right did the Leasehold Reform Housing and Urban Development Act 1993 introduce?
323
What is the basis of a new lease for a flat under the 1993 Act?
324
What is the basis of valuation in Schedule 13 for the new lease premium under the 1993 act?
325
How long can a lease be extended for?
326
Is a premium payable upon the grant of an extended lease?
327
What are the additional qualification criteria if the long leaseholder of a house wishes to extend their lease (rather than acquire the freehold)?
328
What are the ways to calculate a modern ground rent?
329
Does a leaseholder have to pay the landlord’s reasonable professional costs?
330
What valuation approach should be used to assess the value of the freeholder’s loss (or landlord’s diminution in value)?
331
When does marriage value generally become payable?
332
What is collective enfranchisement?
333
What does the collective enfranchisement price under Schedule 6 include?
334
What is the capitalisation rate?
335
What is the Delaforce (1970) effect?
336
Explain your understanding of Sloane v Mundy and Reiss v Ironhawk Ltd.
337
Explain the impact of Cadogan Square Properties Ltd v Earl Cadogan and Cadogan v Erkman.
338
What precedent was set by the Zucconi and Deritend cases in relation to relativity?
339
What is an adverse differential?
340
What is leasehold relativity?
341
What is relative value?
342
What do you understand by a Graph of Relativity?
343
Who produces graphs of relativity?
344
Do these graphs vary with different types or locations of property?
345
What is the Parthenia Model?
346
Explain what you understand in relation to the issue of 'down valuation'.
347
What RICS guidance relates to residential leasehold properties and secured lending valuation?
348
What principles from this are you aware of?
349
What sections of the Red Book and the UK National Supplement should this guidance be read alongside?
350
What length of unexpired lease term does the guidance relate to?
351
Why does it not relate to unexpired lease lengths below this?
352
What factors might affect the valuation of a leasehold property according to the Guidance Note?
353
What assumptions might be made in this type of secured lending valuation?
354
What special assumption might be agreed and why with the lender client?
355
What methods are available to value a leasehold property and when/why might you adopt each?
356
When would you use a leasehold relativity graph?
357
How would you choose which leasehold relativity graph to use?
358
What would you use a magnet / plumb bob / spirit level for during an inspection?
359
How would you value a property affected by Japanese Knotweed?
360
What does the legal case of Ryb v Conways (2019) say about the valuation of property affected by Japanese Knotweed?
361
What valuation approach does the RICS recommend is taken when valuing property is affected by Japanese Knotweed?
362
What guidance sets this approach out?
363
What is the House Price Index and how would you use it when valuing a residential property?
364
What are some of the key drivers of demand for housing?
365
How would you assess and report on condition in an investment valuation?
366
How could a S106 agreement affect the valuation of a new build home?
367
How would you analyse a part-exchange comparable?
368
What is a neighbourhood in terms of residential valuation and why do you need to understand this concept?
369
When analysing comparable evidence how would you apply the concept of adjusted value?
370
What residential design features do you consider add value in your locality?
